Travelers drops key aggregate treaty, hikes XoL retentions at renewal

US property insurer  The Travelers admitted to having lifted retentions on its corporate catastrophe excess of loss reinsurance treaty by half a billion at the 1.1. renewals and having dropped a key 1.1 aggregate treaty altogether.

The $500 million 'underlying property aggregate catastrophe excess of loss reinsurance treaty' went unrenewed at 1.1.

“We did not renew,” CFO Dan Frey told the Q4 earnings call, citing the rugged changes on the reinsurance market.

“We believe that a hardening reinsurance market provides a relative advantage for Travelers,” he said. Reinsurance purchase below peers against Travelers underwriting performance will either pad margins or enable competitive pricing, he said.

The prior year presentation had claimed the treaty covered a 45% portion of $500 million in coverage above a $2.0 billion retention, based on an accumulation of qualifying losses from designated North American cat events above $10 million per event.

The larger $2 billion ‘corporate catastrophe excess of loss reinsurance treaty,’ covering one or multiple events, now sports retentions at $3.5 billion versus a listed $3.0 billion the year prior, a presentation accompanying Q4 earnings indicated.

Qualifying losses for each occurrence follow a $100 million deductible, as was the case in the prior year treaty.

But prior year presentation had also claimed a 10% co-participation, absent from the current year brief description.

The standard array of additional side facilities remained as listed the prior year, including: cat bonds via Long Point Re IV, a northeast property cat XoL treaty, a middle market earthquake XoL treaty, a personal insurance earthquake XoL treaty, a Canadian property XoL treaty and “other international reinsurance treaties.”

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